Ladies and gentlemen. I feel honored to be amidst intellectuals from across
the globe gathered here in Cambridge today. I am grateful to Professor Barry for
the invitation and opportunity to share Hengchang’s practices and achievements
in financial counter-fraud. Like many Chinese people, I was acquainted with
Cambridge through Xu Zhimo’s poem, Saying Goodbye to Cambridge Again. I fell in
love with Cambridge as soon as I set foot on it, which I believe is more
beautiful than the one depicted by Xu Zhimo. However, at this moment, what
touches me more is this gathering of intellectuals for sharing wisdom, which I
value more than any scenic beauty.

Digital Inclusive Finance Propels China’s Economic Development

China’s Internet finance has developed at a strikingly rapid pace over the
last decade. In terms of service users and the scale of working capital, China
is definitely a leader in the field. Digital inclusive finance based on
innovative financial technology and applications is increasingly empowering
China’s economy. The governments of developing countries, represented by China,
have released a variety of policies for developing inclusive finance and
bringing more people under its ambit, so as to allow the masses to avail truly
innovative and convenient services.

In the process of industrial development, financial anti-fraud has been an
integral part of constructing risk control systems of Internet financial
enterprises. In recent years, Chinese enterprises, including Hengchang, have
demonstrated that the application of fintech is fundamental to financial
anti-fraud.

Hengchang Realizes Leading Business Scale after Six Years of Efforts

I founded Hengchang six years ago. Based on the Internet as its main channel,
Hengchang provides a wide range of services for borrowers and lenders
(creditors) for realizing direct lending, such as information collection,
information release, credit evaluation, information interaction and lending
promotion. As a fintech enterprise engaged in innovative financial services,
Hengchang has played a leading role among other enterprises with a similar
business scale. So far, Hengchang has promoted loan exchange of more than RMB 30
billion in total, covering more than 300 cities in over 20 provinces,
municipalities and autonomous regions.

We have found that the real source of bad debts and losses lies in defrauding
customers rather than subprime customers. Our top priority of risk control in
Internet finance is to prevent fraud. Overseas fraud rate is roughly 20%, but
China’s rate is much higher. The fraudsters these days cannot be equated with
the thieves who used to work alone in past times. Using the Internet, several
developers, camouflage kit providers, trainers, implementers and cash-out
personnel have made their nexuses with complete underground industrial chains.
In response to increasingly professional fraudulent conducts, manly platforms
have constructed an anti-fraud management system.

With the rise of artificial intelligence and rapid development of big data,
knowledge mapping, machine learning, etc., we can increase the accuracy and
coverage of risk control system based on adept rules and training models of mass
historical data by controlling risks with objective data. As a practitioner of
financial innovation, Hengchang has proactively developed and taken advantage of
financial technologies to improve risk control, especially for anti-fraud. Our
anti-fraud measures involve equipment identification technology, which can
guarantee accurate identification of the behaviors and intention of borrowers.
We also use anti-fraud API services, which can identify library hitting,
high-risk and fraudulent persons, coupled with authentication, account risk
identification and anti-fraud against “Wool Group”, among others.

For example, knowledge mapping technology ensures accurate identification of
the behaviors and intention of borrowers. Hengchang has constructed a graph data
system based on big data. As the core of anti-fraud measures, a man should be
judged by the company he keeps and not by what he describes himself to be. A
person has little chance of creditworthiness if he is surrounded by deadbeats or
punks. Therefore, the essence of graph database is to measure the
characteristics of a person from the people surrounding him (even the
environment at N levels). It should be mentioned that graph data storage is the
most convenient and suitable storage mode, and construction of graph database
has become inevitable for anti-fraud. Based on this, Hengchang has integrated
various data, such as data for respective stages of the main service lines in
operation system and user authorization data, besides forming a graph database
covering hundreds of millions of entities and billions of relationships. The
data increases as the number of users increases. Relying on knowledge mapping
technology based on graph database, a variety of information can be connected,
forming a network of relationships without the barrier of fragmented
information. In addition, new data sources can be added with ease and such
visualized content can help credit auditors (to) analyze the potential risks in
complicated relationships more effectively.

Hengchang Looks Forward to Global Cooperation on Financial Anti-Fraud

Furthermore, Hengchang has applied AI’s biometric identification and other
technologies to the anti-fraud system. For example, anti-spoofing is used to
judge the client’s honesty, coupled with face recognition. Similarly, voiceprint
recognition can also identify the person just like fingerprint. At present, our
technical platforms cover customer disconnection repair, engine for anti-fraud
rules, fraud ring investigation, etc., with early risk warning and other
technologies which shall be updated in the near future.

Internet finance is bound to be globally influential. I hope the experience
from Hengchang can provide some reference for fintech enterprises in financial
anti-fraud through such a forum of global influence. I also hope our technical
team can contribute more to global financial anti-fraud through ongoing
efforts.

90 years ago, Xu Zhimo wrote in Saying Goodbye to Cambridge Again, “Very
quietly I take my leave, as quietly as I came here”. However, I will not leave
Cambridge quietly but with greater responsibility, for I have gained a lot
during this exchange. I am already looking forward to the meeting next year
where I hope to share latest technological updates and other business stories.
Thank you.